Al Jazeera Documentary Tracks Illegal Peruvian Wood Entering U.S.

Al Jazeera Documentary Tracks Illegal Peruvian Wood Entering U.S.

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August 13, 2015

A new investigative documentary released this week by Al Jazeera, “Peru’s Rotten Wood,” shows with new evidence that illegally logged timber stolen from the Peruvian Amazon is still coming to the United States markets, making U.S. customers unwilling accomplices of forest destruction, corruption, and human rights violations.

Al Jazeera confirms that the large scale fraud and corruption EIA documented in its 2012 report, The Laundering Machine, continues to plague Peru’s forest sector. Loggers routinely falsify harvest plans to launder timber from outside their concession boundaries. This timber then makes its way to consumer markets around the world. Al Jazeera tracks a suspicious shipment from a Peruvian port to the forest the exporter claimed it originated from. Accompanying a team from OSINFOR, the Peruvian government office in charge of overseeing the forest sector, the journalists verified that no logging activity occurred at the declared harvest area. The timber was in fact illegally harvested somewhere else in the Peruvian Amazon, and laundered with documents facilitated by corruption. The journalists then followed the shipment all the way to the United States where it arrived in the Port of Houston destined for Global Plywood and Lumber, a company registered in Nevada, a state notorious for its lack of corporate ownership transparency, and operating in Poway, California from the backroom of a volleyball training facility.

The United States has a powerful tool at its disposal to curb this illicit trade. In 2008 for the first time in the world, the United States passed a law prohibiting the import of illegally harvested wood products. Prior to 2008, the United States was a no-questions-asked market, and wood stolen from the forests of the world—including the Peruvian Amazon—routinely entered in the U.S. marketplace. Now there are stiff penalties for such crimes and the wood products industry is beginning to shows signs of transformation. Importers are taking steps to clean up their supply chains, but much more remains to be done. The U.S. government must take decisive action to investigate and prosecute violations of this groundbreaking law to solidify these market changes.

When Al Jazeera spoke to the owner of the importing company, he claimed that he followed all U.S. laws, including the Lacey Act. Nonetheless, wood deemed illegal by the Peruvian government still found its way in to Global Plywood’s supply chain. As Assistant U.S. Attorney Seth Wilkinson said in relation to a recent Lacey case, “You can’t turn a blind eye, you can’t buy products that you know are stolen, make a huge profit off it and then just say, ‘I didn’t know what I was doing’.”

Not only did the Al Jazeera documentary reveal that the loggers routinely use the exact same laundering mechanisms EIA presented in The Laundering Machine, but the same actors identified in 2012 continue to operate with impunity to this day. According to Peru’s public registry (SUNARP), the exporter identified by Al Jazeera, Inversiones La Oroza SRL, is owned by the same proprietors of a timber concession, Oroza Wood SAC, that was cancelled in 2012 after EIA’s report illustrated that their illegal timber was coming to the United States.1 According to the CITES export permits analyzed by EIA, the Peruvian timber company Maderera Bozovich SAC was exporting timber from the Oroza Wood timber concession, but OSINFOR's field reports show that the timber was not coming from the Oroza Wood concession area, meaning that the timber was harvested somewhere else and illegally laundered with the documents—and the complicity—of the Oroza Wood owners. Knowing that the Peruvian authorities were coming to the field to verify the existence of the stumps of the exported trees, Oroza Wood “planted” slices of trees at the exact GPS coordinates where the fake trees were supposed to be, in an attempt to defraud OSINFOR.2

Al Jazeera also shows how this corrupt system violates the rights and interests of indigenous communities and how these communities are routinely abused by loggers operating on their territories and wrongly held liable for illegal logging on their lands. Loggers enter in contracts with indigenous communities to harvest timber from their land, arguing that they will follow the law, but simply use those contracts to launder timber from elsewhere. When the indigenous community members try to stop the illegal loggers they are frequently threatened and in some cases, even murdered, as was the case of Edwin Chota, Leoncio Quinticima, Jorge Ríos, and Francisco Pinedo in 2014. The largest indigenous organization in Peru, AIDESEP, has developed an innovative new approach to forest monitoring called the Veeduria Forestal in an effort to stem these abuses. The Veeduria Forestal has entered in to an agreement with Peruvian governmental institutions to better monitor infractions on community lands. (To see AIDESEP's press release on the Al Jazeera documentary and the Veeduría Forestal, please see here (Spanish)).

While these investigations document specific instances of how illegal logging persists in Peru, it is clear that the scale of the illegality in the market is considerably higher. The World Bank estimates that 80 percent of Peru’s timber exports have been illegally logged.3 The world's consumers of this timber have a unique opportunity to shift market demand and put a stop to this pervasive crime.

A recent assessment by EIA of the implementation of the U.S.-Peru Free Trade Agreement found that the implementation of the commitments made by both countries to rout out this illegal trade is still weak and ineffective. Some Peruvian government officials and institutions are doing urgent work of identifying illegal logging and the actors responsible, but exports of illegally logged timber clearly continue, and known criminal actors simply operate under different company names. Criminal—not just administrative— sanctions are required to effectively deter these infractions. These actors need to be held accountable when violations are identified, and the Peruvian forest sector needs to be able to incorporate the field data in a timely fashion in order to stop the illegal timber before it leaves the country. The U.S.-Peru FTA must be fully implemented, particularly its special provisions intended to stop the trade on illegal timber. If the U.S. authorities had properly followed up on all the data provided in 2012 in EIA’s The Laundering Machine report and related submission requesting an official investigation, they would have been able to prevent these same actors that were found to be exporting illegal timber in 2012 from doing so in 2015.

For example, the Peruvian government’s successful “Operativo Amazonas” operation demonstrated the enforcement value of requiring exporters to include documentation about the point of harvest of the timber in their export records. Peruvian authorities were able to ascertain information about the location of harvest during this special operation, but it is not yet required by Peruvian law for exporters to provide this information prior to export. Doing so will assist Peruvian and American businesses and authorities in verifying the legality of the timber.

Erik Fischer, in his role as the President of the timber chapter at the Association of Peruvian Exporters (ADEX), puts the blame on the corrupt authorities that facilitate timber laundering, saying, “The government authorities are the ones who shouldn't be lawbreakers." He continues, “The first link is an official in the regional office who makes this ‘bad’ wood seem legal…. Don’t tell me you’ve found a load of illegal wood. Tell me the official who authorized the shipment.” While Mr. Fischer rightly notes the importance of routing out corruption, private actors making corrupt payments and profiting from the illegal trade are not blameless. Fischer said he hopes the owners of Inversiones La Oroza can justify their actions, but falls short of calling for any real accountability for illegal actors. He said, “But I also want to be fair and say, what’s the alternative? That every time someone buys wood, one has to enter into the Amazon and certify each tree to see where it came from?” OSINFOR, the Peruvian authority responsible for going to the field to verify the legality of harvesting operations, has invited ADEX to check the legality of their timber suppliers with OSINFOR’s database. ADEX would be wise to take advantage of this offer, or else risk continued access to markets with laws prohibiting the import of illegally sourced timber.

Notably, Fischer is also a high level executive at Maderera Bozovich, one of the largest timber exporters in Peru with subsidiaries in the United States and Mexico, that was identified as exporting illegally logged timber in The Laundering Machine.

While the Peruvian and the U.S. governments have both recognized the necessity of addressing this ongoing crisis, both governments need to do more. As a consumer and therefore financier of this trade, the United States bears a particular responsibility to act. The Lacey Act must be fully implemented and enforced with the required resources and political support to stop the illegal timber coming from Peru. Illegal timber has been entering the United States from Peru for years now and it is time to take clear action to arrest this trade, sending a clear signal to exporters in Peru that the status quo will no longer be tolerated.

In this fourth installment of EIA’s Raw Intelligence series, we introduce you to the company Hua Jia – one of the most emblematic timber companies in Gabon. Hua Jia officials had much to say on how they and others in the industry operate – and cheat their way to profit-laden pockets.

In 2018 the Environmental Investigation Agency continued to confront the greatest environmental threats facing the world today. The EIA team pursued, documented and exposed the activities of syndicates that threaten endangered species, damage the climate and ozone layer, and drive the trade in timber stolen from the world’s most important remaining forests.

In this fourth installment of EIA’s Raw Intelligence series, we introduce you to the company Hua Jia – one of the most emblematic timber companies in Gabon. Hua Jia officials had much to say on how they and others in the industry operate – and cheat their way to profit-laden pockets.